U.S., EU Regulators to Overhaul Pharma M&A Reviews

U.S., European Union and other antitrust enforcers are teaming up to overhaul how they weigh pharmaceutical mergers in a move that could curb transactions seen as raising prices or dampening innovation.

The Federal Trade Commission and the Justice Department will work with the European Commission, the U.K.’s Competition and Markets Authority and the Canadian Competition Bureau to identify ways to scrutinize deals more closely, according to emailed press releases from the FTC and the EU. Three state attorneys general will also join the group, the statement said.

“Given the high volume of pharmaceutical mergers in recent years, amid skyrocketing drug prices and ongoing concerns about anticompetitive conduct in the industry, it is imperative that we rethink our approach toward pharmaceutical merger review,” said FTC Acting Chairwoman Rebecca Kelly Slaughter.

The focus on the pharmaceutical industry comes in the middle of a global pandemic with immense pressure on companies to develop and produce vaccines, which has ensnared AstraZeneca Plc in a row with European regulators over vaccine supplies and safety.

AstraZeneca’s $39 billion bid for Alexion Pharmaceuticals Inc. is the largest pending deal in the pharmaceutical industry, according to Bloomberg data, outranked only by a potential $96 billion AstraZeneca bid for Gilead Sciences Inc. Alexion said Monday that AstaZeneca refiled for approval with the FTC.

Before becoming the acting chairwoman of the agency, Slaughter opposed a number of FTC settlements that approved major pharmaceutical mergers. In 2019, she dissented when the agency cleared Bristol-Myers Squibb Co.’s acquisition of Celgene Corp., arguing the agency’s approach to analyzing competitive harm from pharma deals is too narrow. Last year she dissented when the agency cleared AbbVie Inc.’s takeover of Allergan Plc, saying the agreement didn’t adequately ensure continued innovation by the combined company.

EU regulators reported in 2019 that nearly a quarter of the pharmaceutical deals they reviewed from 2009 to 2017 showed a risk of potential price increases, especially for generic versions. They sought divestments before clearing those deals.

The EU is increasingly examining deals to check whether an acquirer is likely to kill off a promising medicine in development. AbbVie had to sell a pipeline Allergan drug last year to win EU merger approval.

©2021 Bloomberg L.P.

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